Will the Housing Bubble Pop?
Updated: Aug 19, 2021
I have been asked this so many times. I am not going to even attempt to put a number to how many. I've been asking this since I first started as an agent in 2019, but even more so in the recent months because of the extremely aggressive market.
I can fully understand why this is on everyone's mind. Especially first time home buyers. My clients have been curious if they should sell and take advantage of the market or the buyers are trying to decide if they wait until the crash so that they can get a good deal on a home. It makes sense. I've had clients that have been waiting for the past two years for this crash.... (I'm just going to throw this out there) if they would have bought when we first talked, 2 years ago, they would have a lower price on their home and be sitting on about 40% appreciated equity. So waiting can cost you. If you're thinking of buying you have to try and calculate that risk.
So, the thing on everyone's mind.... when is the housing market going to crash? The honest truth, I have no idea. No one does! It is all just speculation. I could crash tomorrow! I could crash in ten years. I will state my opinion on the market but just take it with the knowledge that, I truly have no clue!
To understand if its going to crash or not, we need to have a clear picture of the current market. Here is a quick snapshot.
Home prices have been appreciating at an incredible rate here in Utah since 2016. This year has so far had the same amount of appreciation as all of 2020. Supply for homes has appeared to dwindle. (it is actually still comparable but demand has increased, here is more info on that) The amount of time it takes to sell a home is incredibly short. Mortgage rates have been at record lows. It is a strong sellers market.
There is a very brief summary of the current market. Will it crash? I don't think so, at not least because of the housing market. Since 2008 there have been many new restrictions on the home market to try and control the manipulation of the market and avoid a crash. Not to mention that there is a huge demand for homes and that demand isn't just going to disappear. Until something big (and I mean major) happens that will keep buyers from having the purchase power that they currently have, then I don't see demand dropping so low that home prices depreciate.
Again I want to emphasize that no one knows, this is just my simple take on the market.
Here is what I think would be the more likely scenario. I believe that we could see the market plateau or become stagnant. Prices increase too high that the demand drops off. I have already had a large number of my clients get priced out of the market. Either they didn't have the capital to compete against other offers or they didn't qualify for the price they wanted.
Within the past month I've actually noticed a slow down for the market. Read about it by clicking the link.
So will the market crash? I don't know. I hope not, because though for some buyers they think it would end great, a crash is an economic downturn that hurts individuals and families. I think the crash coming from the home market is unlikely and that we'll still see upwards growth for the time being.
I hope that helped a little. Honestly is like asking the for someone to tell the future. You can't, you have to calculate the risk and then take a leap of faith. Not taking and action is also an action with consequences, as I stated earlier. Best of luck. If you do want to take that leap in the Real Estate Market I would love to help. Contact me.